Do Chinese KOLs/influenceurs can work only a Commission Basis? “With big brands yes. With small one no”. Explained Philip Chen GMA
Understanding KOLs in China: The Business Model Explained
Key Opinion Leaders (KOLs) in China are “powerful” who drive purchasing decisions and generate massive sales for famous brands. Whether through livestreams, short videos, or social media posts, they’re a critical component of any successful marketing strategy in China. (read more)
Here’s the truth: Chinese KOLs are not cheap, and success is never guaranteed. Olivier VEROT GMA
Let’s break down how the KOL business model works, the costs involved, and what brands can expect when partnering with influencers in China.
The KOL Business Model in China
1️⃣ Livestreaming as the Core Revenue Driver
- Livestream e-commerce is a booming industry, where KOLs showcase products live and interact with their audience in real time.
- KOLs combine entertainment and sales, driving impulsive purchases by creating a sense of urgency.
- Example: Li Jiaqi (the Lipstick King), one of China’s top livestreamers, has sold millions of products in a single session.
2️⃣ How KOLs Charge Brands
- Entry Fees (Guaranteed Payments):
- Most KOLs require a fixed upfront payment to feature your product.
- Fees can range from RMB 50,000 to RMB 500,000+ ($7,000 to $70,000+) depending on the KOL’s fame and audience size.
- Commission (10-40%):
- In addition to the upfront fees, KOLs take a commission on every sale made during the livestream or campaign.
- The standard commission is between 10% and 40%, with more famous KOLs demanding higher rates.
- Discounts Required (30-80%):
- To attract their audience, KOLs often demand steep discounts on products (sometimes up to 80%).
- Brands need to factor in these discounts when calculating profitability.
💡 Key Insight: Even with high upfront costs and commissions, working with KOLs can deliver unparalleled reach and sales volume when done right.
3️⃣ Audience Size and Engagement Matter
- Micro-KOLs:
- Smaller audience sizes (10,000–100,000 followers) but highly engaged and niche-focused.
- Lower fees but still effective for niche markets.
- Macro-KOLs:
- Larger followings (1M+), often associated with higher fees and broader reach.
- Suitable for mass-market products but less personal engagement.
- Top-Tier Livestreamers:
- Celebrities like Li Jiaqi or Viya (before her tax scandal) have millions of fans and can sell out products in seconds.
- Fees and commissions at this level are sky-high.
Challenges of Working with KOLs
- No Guarantees: Even with upfront payments, success isn’t assured. If the KOL’s audience isn’t interested, sales can flop.
- High Costs: The combined cost of entry fees, commissions, and discounts can be prohibitive for smaller brands.
- Competitive Space: Top KOLs are often booked months in advance, and brands must compete to secure slots.
Tips for Working with KOLs in China
1️⃣ Choose the Right KOL
- Focus on KOLs whose audience aligns with your target market.
- Check their engagement rates, past campaign performance, and authenticity (beware of fake followers).
2️⃣ Negotiate Terms
- Negotiate reasonable entry fees and commission rates. Some micro-KOLs may be willing to accept commission-only deals if your product is strong.
3️⃣ Provide Competitive Discounts
- Chinese consumers love discounts during livestreams. Ensure your pricing strategy can support the required 30-80% markdowns.
4️⃣ Monitor Results Closely
- Use analytics tools to track sales, audience engagement, and ROI during the campaign.
- Adjust strategies based on performance to optimize future collaborations.
Conclusion
KOLs in China are a high-risk, high-reward strategy. While the costs can be steep—with entry fees, commissions, and heavy discounts—partnering with the right KOL can drive incredible brand awareness and sales. To succeed, brands must carefully select influencers, negotiate terms, and have a clear plan for measuring results.
In China’s fast-moving market, KOLs are not just an option—they’re a necessity if you want to stay competitive.
We are a Digital marketing agency in China
Feel free to contact us if you have a project, want to sell in China